Advance holiday pay for apprentice & NI contributions

My parents own a small hairdressing salon (and have done for many years). They pay their staff in cash every saturday. When their staff take holiday they pay them cash in advance, so it's usually the week they've worked plus the two weeks in advance. In terms of tax this means that sometimes the employee is taxed more on the "lump sum" because of the amount, but then because they haven't worked / earned for two weeks by the time they are next paid the tax is lower than usual so it balances out. However, in terms of the NI contributions, receiving a lump sum sometimes pushes the employee over the threshold of paying contributions so they have that amount taken out of their holiday pay and it is never repaid / balanced out. This effectively means they are penalised for having that money in advance. One of the staff have questioned this and me and my parents have been trying to work out if there is any way around this. Can anyone help out here?

I had this situation the long on short of it was if they wished to be paid weekly it had to be in arrears so they got their holiday pay when they returned.Alternative weekly by BACS transfer.It is worth considering that your parents will have to create a workplace pension I the next few years and the charges are higher for weekly payments. Now might be time to gradually move to monthly payments by BACS which is what I did. I offered a gradually movement over six month period actually all of the staff choose to be paid fortnightly for 1 month and then go to monthly.

Thanks again all, this really is so helpful. My parents have an accountant and they tell her how many hours each person works per week and she tells them how much to pay (based on tax and contributions deductions) and they then write a check for each employee. Apprentices earn different amounts but currently they have one person on 3.30 (gbp) per hr and one on 6.70 per hr and they each do 36 hours.

My parents have spoken to their accountant yesterday but she was less than helpful, suggesting they should pay when they get back from holiday but when you're on such low wages it's kind of impossible to take a holiday without some advance on wages.

It is definitely relevant OP! I wonderd if your parents were doing it themselves, and sometimes it can be confusing for non payroll-y types

The accountant should be doing this as routine! There is no reason to not advance wages correctly. Perhaps they need to insist ask that the accountant does it, or find one who will process their payroll correctly. Fwiw, with the advent od FPS there should never be a 'sub' at all. All payshould be reported on of before the date the employee receives it.